Super 48 Hours

(early post ahead of start of a new business trip to Europe.Posts will continue albeit irregularly)

This is it: The next 48 hours will be among the busiest of the year. The Bank of England meets tomorrow, and it not only gives a verdict on interest rates but also provides an update of its economic projections (Quarterly Inflation Report). And, among the innovations, the MPC minutes will be released. Ahead of the Federal Reserve meeting, the market will have the ADP private-sector job estimate. Initially indicated it would be seen today, the House Ways and Means Committee now says it will reveal its draft bill on tax reform tomorrow. Tomorrow is also President Trump is expected to announce his Fed nomination(s).  

Meanwhile, Asian markets have begun the new month with aplomb. The MSCI Asia Pacific Index rose nearly 1%, the most since early June, and that follows a 4.25% gain in October, the most since January. The Nikkei led the region with a nearly a 1.9% gain, helped by a surge (~11%) surge in Sony as executives lifted the profit outlook. 

Talk has again surfaced that Prime Minister Abe is considering a supplemental budget. This does not strike us as new, or necessarily a commitment of fresh funds, but it was cited as another driver for Japanese shares as if it were needed after the 8%+ rally last month. US 10-year yields are about three basis points above yesterday’s low print, which corresponded to chart support, and this may have also helped the dollar to return to JPY114.00. There is a $910 mln option struck there that expires today. There is also another $580 mln struck at JPY113.75, and $515 mln struck at JPY113.50 that expire today.  

Foreign investors were buyers of South Korean equities, despite the mostly disappointing economic data (October trade data were softer than expected and the manufacturing PMI slipped, while price pressures eased). The Kospi rose 1.3%.The won strengthened against the US dollar for the third consecutive session.